Weekly Market Review —– March 28 – April 1 2016
NFP report will be the main event this week
At the end of the week all the major currencies showed a decline. The British pound showed the largest decline against the US dollar (-2.39%). The Canadian Dollar showed a smaller drop (-1.79%), Japanese yen (-1.38%), the New Zealand dollar (-1.34%), the Australian dollar (-1.05%), the euro (-0.90%) and Swiss franc (-0.85%). During all week, American currency was recovering lost positions, after last weeks Fed’s decision on interest rates On March 15-16. Janet Yellen’s said that no more than two rate hikes should be expected in the current year. However, last week several Fed leaders did not rule out the possibility of a rate hike at the next meeting, scheduled for April 26-27. Thus, the market re-emerged speculation about imminent monetary tightening by the Fed. Meanwhile, the past week was shortened due to Catholics’ Good Friday. This week there will be a few important economic news such as inflation reports from Germany and the Eurozone, which will be presented on Wednesday and Thursday respectively. Also, there will be important data on manufacturing activity in China and the NFP report, which will be published on Friday.
The first half of the last trading week, major US stock indices were in the upward trend. Some support to the US stock markets was provided by Fed’s decision and the increasing price of oil. The presentation of new products from Apple on Monday also influenced the market. But from the second half of the week the dynamics changed dramatically due to some fall of quotations of oil, which put pressure on shares of energy and commodity companies. In addition, several Fed leaders called for an early rate hike. This week investors should pay attention to US data on personal income and spending, as well as on the labor market. The Chinese data on manufacturing activity will be published next Friday.
Last week started with major stock indices’ fall. They were under pressure because of Brussels terrorist acts. Let us remind that on Tuesday in Brussels, there were three explosions that killed more than 30 people. Responsibility for the event has assumed a terrorist organization “Islamic State”. According to analysts, these developments could seriously hit the tourism business and financial services sector in the region. Nevertheless, the positive statistics on Eurozone business activity in the manufacturing sector and the service sector stopped stock markets’ decline. This week investors will pay attention to inflation reports from Germany and Eurozone. Also there will be UK GDP publication.
Quotes of the precious metal were in a downward trend during last week due to the strengthening of the US currency. The only one exception was Tuesday, as investors started to buy gold as a safe asset after the events in Belgium. However, gold has come under severe pressure after several Fed leaders noted that they expect more than two rate hikes this year, and do not exclude the possibility of the next increase in April. In addition, the fall of gold’s quotations was due to technical factors. This week the main event will be report on the US labor market – NFP, which traditionally will be presented on Friday at 12:30 (GMT).